This report analyses the impact of sanctions on the Russian oil and gas sector and the energy transition more widely.

It finds:

  • Serious impacts of sanctions on oil exports are approaching as the EU, the G7 and Australia banned seaborne imports of Russian crude oil from December 2022 and oil products from February 2023.
  • A lower price for Russian oil will weaken the revenues accruing to the Russian federal budget.
  • Various approaches have been applied to circumvent oil sanctions.
  • Gas production fell by 11.8% largely because pipeline supplies to the EU and the UK were cut by 56%; Russia has very limited options of redirecting these pipeline gas volumes to other markets.
  • The Russian authorities aim at increasing domestic gas use; however, this is not necessarily commercially attractive for gas producers.
  • New pipeline infrastructure is costly. Without revenues from gas exports, this will be almost impossible for Gazprom to finance.
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Background

Climate Strategies commenced a project on Russian Energy Transitions in December 2021. Following the start of the Russian War in Ukraine in February 2022, we determined to continue the project to maintain insights in the rapidly evolving Russian energy sector. This research was co-authored by a group of experts in fossil fuel transitions and climate policy. However, a number of our experts appear under pseudonyms to protect their identity, as expressing critical views on Russian government policies incurs personal risk.